Suppose Julia and Zach are the only consumers of milk. Julia's demand for milk is defined as QdJulia = 12 - 3P at prices below $4 and zero for prices above $4. Zach's demand for milk is defined as QdZach = 10 - 2P at prices below $5 and zero for prices above $5. In this case, the market demand curve for milk is:
A. upward sloping.
B. a downward sloping straight line.
C. kinked at a quantity of 2 units.
D. kinked at a quantity of 1 unit.
C. kinked at a quantity of 2 units.
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From an economic perspective, price discrimination is desirable because
A) the increase in profits is more than offset by the loss in consumer surplus, resulting in a net increase in economic surplus. B) it redistributes wealth from wealthy consumers to highly innovative firms. C) it enables firms to increase profits with no loss in economic surplus, and in turn, this could provide firms with incentives to engage in beneficial product innovation. D) the increase in profits results in higher corporate tax revenues received by the government which could be used to subsidize consumption for low-income individuals.
Which of the following does NOT represent a possible shape of the long-run average cost curve?
A) downward sloping B) upward sloping C) U-shaped D) vertical
Interest is paid to
A) all holders of stock. B) individuals who own gold. C) owners of capital. D) borrowers of funds.
If firms are required to pay the social costs of a negative externality, they would produce more of the good causing the externality
a. True b. False Indicate whether the statement is true or false